Sudan Diagnostic Trade Integration Study
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Revitalizing Sudan’s Non-Oil Exports: A Diagnostic Trade Integration Study (DTIS) Prepared for the Integrated Frame- work Program December 2008 CURRENCY EQUIVALENTS US$1.00 = 2.03 Sudanese pounds FISCAL YEAR January 1 – December 31 WEIGHTS AND MEASURES Metric System ABBREVIATIONS AND ACRONYMS ACP Africa, Caribbean and Pacific MoFT Ministry of Foreign Trade ASYCUDA Automated System for Customs NETREP National Emergency Transporta- Data tion Rehabilitation Project CGA Customs General Administration NPL Non-performing Loan COMESA Common Market of Eastern and OECD Organization for Economic Coop- Southern Africa eration and Development CPA Comprehensive Peace Agree- OIE World Organization for Animal ment Health DRC Democratic Republic of Congo POL Petroleum, Oil and Lubricant DTIS Diagnostic Trade Integration SHHS Sudan Household Health Survey Study SPC Sudan Ports Corporation EBA Everything But Arms Initiative SPLA/M Sudan People's Liberation EPA Economic Partnership Agree- Army/Movement ment SPS Sanitary and Phytosanitary Stan- EPZ Export Processing Zone dard EU European Union SRC Sudan Rail Corporation FDI Foreign Direct Investment STP Sudan Trade Point FIAS Foreign Investment Advisory TBL Through Bill of Ladings Service TBT Technical Barriers to Trade FOB Freight on Board TEU Twenty-foot Equivalent Unit FTA Free Trade Agreement TIC Trade Information Center GAFTA Greater Arab Free Trade Area TIR Transport International Routier GATT General Agreement on Tariffs TPB Trade Promotion Body and Trade TRQ Tariff Rate Quota GoNU Government of National Unity TTF Trade and Transport Facilitation GoSS Government of Southern Sudan UAE United Arab Emirates GSP Generalized System of Prefer- UNCTAD United Nations Conference on ence Trade and Development IF Integrated Framework UNIDO United Nations Industrial Devel- IMF International Monetary Fund opment Organization ITC International Trade Center UNDP United Nations Development Pro- LDC Least Developed Country gram MFN Most Favored Nation VAT Value Added Tax MOCI Ministry of Commerce and In- WTO World Trade Organization dustry (GoSS) TABLE OF CONTENTS ABBREVIATIONS AND ACRONYMS..................................................................................................... ii PREFACE .....................................................................................................................................................vi ACKNOWLEDGEMENTS ....................................................................................................................... vii EXECUTIVE SUMMARY ....................................................................................................................... viii A. Revitalizing Non-Oil Exports is Relevant for National Priorities................................................ viii B. Major Constraints are Primarily, but not Exclusively, Internal .........................................................ix C. Making Trade a Lever for Economic Growth and Poverty Reduction ..............................................xi 1. Raise productivity .............................................................................................................................xi 2. Reduce trade costs ............................................................................................................................xi 3. Rationalize the incentive regime .......................................................................................................xi 4. Improve trade institutions ................................................................................................................xii 1. SOCIOECONOMIC SETTING .........................................................................................................1 Impressive Real Growth but Emerging Vulnerabilities.............................................................................1 Poverty and Regional Inequalities ...............................................................................................................6 Trends in International Trade Flows...........................................................................................................7 Direction of Trade................................................................................................................................10 Commodity Composition of Trade .......................................................................................................12 Summary ......................................................................................................................................................16 2. TRADE POLICY AND INSTITUTIONS........................................................................................17 Is Sudan Constrained by Foreign Market Access Barriers? ...................................................................17 MFN Barriers are Low ........................................................................................................................17 Preferential Arrangements and Preference Utilization .......................................................................18 The U.S. Economic Embargo: An Indirect Barrier to Trade ...............................................................21 Economic Partnership Agreements......................................................................................................22 Tariff and Incentive Regime: Does it facilitate integration?....................................................................23 Sudan’s Tariffs are High and Variable................................................................................................24 Multiple Tariff Regimes .......................................................................................................................25 Other Taxes Raise the Costs of Trading ..............................................................................................26 Export Incentive Schemes: Do They Overcome the Anti-export Bias? ................................................27 Trade Promotion Bodies .............................................................................................................................29 Sudan Trade Point ...............................................................................................................................29 Sudan Trade Information Center .........................................................................................................29 Export Promotion in Southern Sudan ..................................................................................................30 Recommendations ................................................................................................................................30 Negotiating WTO Accession: How Can Membership Increase Integration?.........................................30 Where Does Sudan Stand in the Accession Process, and What’s Left to Do? .....................................31 How Will WTO Accession Benefit Sudan?...........................................................................................31 Improving Sudan’s Trade Policy-Making Capacity.................................................................................35 Summary ......................................................................................................................................................37 3. SECTORAL CONSTRAINTS TO COMPETITIVENESS ...........................................................39 Agriculture...................................................................................................................................................39 Overview of Agriculture Trade and Production ..................................................................................40 Analysis of Factors that Undermine Competitiveness .........................................................................44 Effects of Removing Constraints to Agriculture...................................................................................47 Findings: Key Constraints on Agricultural Exports ............................................................................49 Sugar.............................................................................................................................................................50 Industry Overview................................................................................................................................50 Preferential Treatment for Sugar Exports ...........................................................................................51 ii Sugar Market Policies..........................................................................................................................52 Conclusions and Recommendations.....................................................................................................53 Manufacturing.............................................................................................................................................54 Trade Performance ..............................................................................................................................54 Vegetable Oils......................................................................................................................................57 Textiles and Clothing ...........................................................................................................................59 Pharmaceuticals ..................................................................................................................................60